By Brian Marckx, CFA
FluoroPharma Medical (OTC BB:FPMI) filed their 10-Q for the third quarter ending September 30, 2012 on November 14th. Operating expenses remain very much in-line with our expectations and have actually come in slightly below where we have estimated for the past three quarters. Q3 operating expenses were $1.0 million compared to our $1.1 million estimate. Management also continues to manage cash well, keeping burn to a minimum while forging ahead with product development and building awareness of their novel cardiac PET tracing agents.
Q3 net loss to common and EPS were $1.0 million and ($0.05), in-line with our $1.1MM and ($0.05) estimates. Cash used in operating activities was $909k in Q3, up from $694k in Q2 - the difference largely due to a $126k pay-down in A/P during Q3. Cash balance was $776k at 9/30/2012 compared to $1.7 million at 6/30/2012.
Recent highlights in product development include the announcement that BFPET turned in very high quality images from the initial patients of an investigator-led study in China (see below). Relative to increasing visibility and awareness to industry leaders, FPMI's products were highlighted at two major scientific forums during Q3; the high quality BFPET images were presented in Baltimore at the Annual Scientific Session of the American Society of Nuclear Cardiology in a lecture titled, "Nuclear Cardiology in 2012 and Beyond: Can We Meet the Challenges" and earlier that week in Dublin, Ireland two abstracts describing FPMI's products were presented as posters at the World Molecular Imaging Congress.
Management also announced that they have increased their revenue projections for BFPET, CardioPET and VasoPET (with the obvious assumption that these reach commercialization - which we continue to think could begin in 2017) which we think was driven by trends that they are seeing in the industry and feedback from professionals in the cardiac imaging space. FPMI details their updated revenue projections for each of their products in their most recent presentation. FPMI's significant expertise with cardiac PET tracers and molecular imaging affords them substantial insight into how recent trends in the cardiac imaging space may evolve into opportunities for their products as they reach the commercial marketplace. The benefits of FPMI's awareness building efforts include not only increasing visibility of their novel products to the professional community but also provide them with an avenue of feedback from industry leaders who can have substantial insight into emerging trends and who often help shape the future of healthcare. We think it's safe to assume that all of this factored in to their raising of revenue estimates.
Given that initial launch of any of FPMI's products is still years away, we have made only relatively modest changes to our model following FPMI's recent announcement relative to their revenue projections. And as there continues to be no material surprises relative to our assumptions regarding product development or related timelines, we have made no material changes to our prior long-term outlook. The updates to our model has had the effect of increasing our DCF-generated price target from $2.00/share to $2.35/share. We are maintaining our Outperform rating.
BFPET Pre-Phase 2 Study Results Very Encouraging
In late July FluoroPharma announced that quality of the initial images using BFPET in a 20-patient (with coronary artery disease) investigator-led stress perfusion imaging study conducted at a hospital in Beijing China were "spectacular" and "superb". All 20 patients are expected to be imaged by Q4. This study is similar in the expected design of the soon-to-commence phase II study where BFPET will be compared to Rb-82 and/or traditional SPECT agents such as sestamibi which suffer from certain drawbacks such as high cost or comparably (relative to BFPET) lower image quality.
Alan Fishman, principal investigator of the BFPET phase I trial (completed in 2008), notes in the press release relative to the current study that "initial results are impressive. Image quality obtained using PET is superb. BFPET shows clear diagnostic qualities as well as increased resolution, inherent in PET. The initial images look spectacular and we are confident that when all the patients are imaged, the data will further support clinical development of the agent."
We view this as an obvious towards development of BFPET, which we think could enter phase II by the current year-end and complete sometime next year. If all goes to plan, phase III trials could wrap up and an NDA filed by the end of 2015. This potentially puts BFPET on the U.S. market by 2016/2017.
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